State Street Moving to South Boston Waterfront

Stealth Outsourcing at State Street?

BOSTON — Despite hundreds of layoffs over the past few years, State Street Corporation remains one of Massachusetts’ biggest employers.

On July 11, that status helped the company land an $11.5 million tax break from the City of Boston to move into a new building on the South Boston waterfront. But as State Street prepares to take Southie, one former employee is warning that the company’s local commitment has its limits.

Dan Armstrong worked as a mutual fund administrator at State Street Corporation for more than 8 years. A year ago, Armstrong said, he and his colleagues were called into a surprise meeting with an executive.

“He said, ‘As you know by now, all your jobs, your unit’s work, will be sent to India,’” Armstrong recalled. “’And you’re going to have people from India coming from Syntel to train with you at your desks to do your jobs.’”

In fact, Armstrong claimed, this came as a total surprise. No one had told his unit about jobs moving overseas — or about Syntel, a Michigan-based company that operates multiple campuses in India and specializes in what’s called “knowledge process outsourcing.”

According to Syntel’s 2011 annual report, State Street is the company’s second-largest customer, after American Express. State Street and Syntel also operate a joint venture in the Indian city of Pune, which State Street has an option to buy.

Everything’s cricket

The next day, Armstrong said, he and his coworkers received mandatory training in how to communicate with Indians.

“It was a class run by a consulting company, some global consulting company, and it lasted 6 hours,” Armstrong said. “We were taught about Indian culture, the Indian family structure, the game of cricket.”

A few days after that, Armstrong added, he and his colleagues were sitting at their desks, teaching Indian workers how to do the jobs they’d been doing for years.

“It was pretty uncomfortable,” said Armstrong. “The Indian people are very nice. I really enjoyed working with them … but it’s just very odd having someone who’s going to take your job sit across the desk from you.”

Illusory growth?

State Street executive vice president Alison Quirk declined to confirm or deny Armstrong’s account. She also refused to discuss State Street’s relationship with Syntel. But she told WGBH that State Street’s local workforce is growing.

“In the state of Massachusetts, we employ about 12,000 employees,” Quirk said. “In the past 5 years, while we’ve been looking at our operating models, that number in Massachusetts has grown about 23 percent.”

But that claim of local job growth may hinge on State Street’s 2007 acquisition of Investors Financial Services Company.

Without the extra employees acquired as part of that sale, Patriot Ledger business editor Jon Chesto said, State Street’s 5-year local-job trend might actually be negative.

Quirk said State Street is growing internationally as well. But she said that’s essential given the way business works today.

“Our clients are global,” Quirk said. “We have to be where they are — and we have to fulfill our promise to deliver high-quality services in as efficient a manner as possible.”

According to Armstrong, however, that claim of local growth masks an ongoing effort to quietly shift some local jobs abroad.

“Right now, the actual transfer of employees or jobs to India is happening in very small increments,” he claimed. “My guess is it’s to avoid the press or politicians. They’re doing it very quietly in very small numbers.”

Quirk admitted that some local jobs may have gone overseas. However, she wouldn’t say which ones, again citing an unwillingness to discuss the company’s partners.

Feelings of guilt

Armstrong acknowledged that outsourcing is a fact of life, in the financial-services industry and elsewhere. But he cited State Street’s tax break from Boston — and the company’s receipt of $2 billion in TARP assistance following the 2008 stock-market crash — as reasons to hold the company to a higher standard.

After he helped train his replacements, Armstrong quit his job at State Street — and said many of his former colleagues did, too. Now, he’s working a temp job and grappling with some lingering guilt.

“When I go home at night,” Armstrong said, “I look at the people on the Red Line, I see kids running around and they’re never going to be able to work in the financial services industry because I kept my job and trained other people to basically screw them over.”

He added, “People don’t care about other Americans. They’re slaughtering the middle class. And no one’s doing anything about it.”